Wherever used in this chapter,
unless the subject matter, context, or sense otherwise requires:

(1)“Business”
means any profession, trade, manufacture, or other undertaking carried
on for pecuniary
profit and includes all activities whether personal, professional, or
incorporated, carried on within the Federated States of Micronesia for
economic
benefit either direct or indirect, and excludes casual sales, as
determined by
the Secretary; however, one who qualifies as an employee under this
section
shall not be considered as a business. Copra
production
by unincorporated copra producers collectively or severally shall
not be included as a business under this definition.

Case
annotations:In FSM Income Tax Law, 54
F.S.M.C. 111 et
seq., cooperatives are not singled out in any way within the
definition of
business and there is no indication in the tax law that cooperatives
are to be
treated differently than corporations or any other forms of
businesses.Kolonia
Consumers
Coop. Ass’n v. Tuuth, 5 FSM R. 68, 70 (Pon. 1991).

Limitation
of
the definition of “business” under the FSM income tax law to “all
activities
. . . carried on within the Federated States of Micronesia” strongly
implies
that activities carried on elsewhere by a business functioning within
the FSM
are not subject to FSM income tax.54 F.S.M.C.
112(1).Bank of the FSM v. FSM, 5 FSM R. 346, 348 (Pon. 1992).

(2)“Commercial
aircraft” means any aircraft capable of and intended for use in
commercial
aviation.

(3)“Employee”
means any individual who, under the usual common law rules applicable
in
determining the employer-employee relationship, has the status of an
employee.

Case
annotations:All government officials are
employees of the
government within the meaning of the FSM Income Tax Law.Heston
v. FSM, 2 FSM R. 61, 65 (Pon. 1985).

Although
plaintiff
incurred expenses in carrying out his obligations under contract,
they were well below 10% of amount he received under the contract.Such expenditures are
insufficient to alter
plaintiff’s status from an “employee” to a “business” under FSM Income
Tax
Law.Heston
v.
FSM, 2 FSM R. 61, (Pon. 1985).

A
taxpayer who held high public office of Chief of Finance, whose
contract gave
him wide degree of discretion in carrying out governmental powers, and
who was
not an outside consultant who could merely suggest or advise but was
an
integral part of governmental operation is a governmental official,
therefore
an employee for purposes of FSM Income Tax Law.Heston v. FSM, 2 FSM
R. 61, 65
(Pon. 1985).

FSM
Income
Tax Law’s distinction between employees and businesses obviously
reflects congressional expectation that businesses and employees are
generally
distinguishable on basis of whether generation of their income would
require
substantial expenditures by them.Rauzi v. FSM, 2 FSM
R. 8, (Pon. 1985).

There
is
common law of taxation which addresses status of public officials as
employees.Rauzi v. FSM, 2 FSM R. 8 (Pon. 1985).

Pohnpei
State
Government official is an employee for purposes of FSM Income Tax Law.Rauzi
v.
FSM, 2 FSM R. 8, 12 (Pon. 1985).

There
appears
to be uniform acceptance by common law jurisdictions of the principle
that government officials are considered employees for income tax
purposes.This amounts to
common law
rule of taxation and yields a result in harmony with the underlying
principles
of the taxation system established by the FSM Income Tax Law.Rauzi
v. FSM, 2 FSM R. 8, 12 (Pon. 1985).

(4)“Employer”
includes any individual, corporation, association, joint stock
company, bank,
insurance company, credit union, cooperative, or other equity or group
employing any person, and also includes the Federated States of
Micronesia,
State and local governments, and their agencies, charged with the
disbursement
of public moneys as salaries or wages.“Employer” also includes the United States Government and
instrumentalities thereof.

(5)“Gross
revenue” means the gross receipts, cash or accrued, of the taxpayer
received as
compensation for personal services and the gross receipts of the
taxpayer
derived from trade, business, commerce, or sales and the value
proceeding or
accruing from the sale of tangible personal property, or services, or
both, and
all receipts, actual or accrued by reason of the capital of the
business
engaged in, including interest, rentals, royalties, fees, or other
emoluments
however designated and without any deductions on account of the cost
of
property sold, the cost of materials used, taxes, royalties, or
interest paid
or any other expenses whatsoever. Gross
revenue
shall not include the following:

(a)refunds
and rebates;

Case
annotations:Patronage refunds paid by a
cooperative to
its members are not refunds within the meaning of 54 F.S.M.C.
112(5)(a) and are
not excludable from gross revenue under the FSM Tax Law.Kolonia
Consumers Coop. Ass’n v. Tuuth, 5 FSM R. 68, 71 (Pon. 1991).

Case
annotations:Moneys held in fiduciary
capacity are
specifically excluded by statute from definition of gross revenue.54 F.S.M.C. 112(5)(b).The term “fiduciary
capacity” is not
restricted to technical or express trusts, but extends to money that
is not the
taxpayer’s own, but which is handled for the benefit of another.NIH
Corp.
v. FSM, 5 FSM R. 411, 416 (Pon. 1992).

(c)wages
and salaries, received by the taxpayer, which are taxed under other
provisions
of this chapter;

(d)sale
payments received for the sale of a commercial aircraft, to the extent
that
such sale payments in any quarter shall equal the rental payments made
to the
buyer/lessor by the seller/lessee of such aircraft for its rental by
the
seller/lessee;

(e)rental
payments received for the rental of a commercial aircraft, to the
extent that
such rental payments in any quarter shall equal the sale payments made
to the
seller/lessee by the buyer/lessor of such aircraft for its purchase by
the
buyer/lessor;

(f)cash
discounts allowed and taken on sales, the proceeds of sale of goods,
wares, or
merchandise returned by customers when the sale price is refunded
either in
cash or by credit; or the sale price of any article accepted as part
of payment
of any new article sold, if the full sale price of a new article is
included in
“gross revenue”;

(g)funds
received by an international organization, foreign contractor, or
other foreign
entity paid from foreign aid proceeds donated to the Federated States
of
Micronesia pursuant to a foreign aid agreement entered into by the
Federated
States of Micronesia, the terms of which require that such gross
revenue shall
not be subject to taxation by the Government of the Federated States
of
Micronesia;

Editor’s
notes:This definition was among
those changed by PL
12-18 § 1.

Case
annotations:Each exclusion from
definition of “gross
revenue” in 54 F.S.M.C. 112(5) seems to represent one or another of
three
possible purposes:to
prevent dual
taxation of revenue of single taxpayer, to make allowances for special
situations, or to exclude funds received bytaxpayer on behalf of another such as refunds and rebates,
moneys held
in a fiduciary capacity, cash discounts taken on sales, or proceeds of
sales of
goods returned by customers when sale price was refunded in cash or by
credit.Kolonia Consumers Coop. Ass’n v. Tuuth, 5 FSM R. 68 (Pon. 1991).

Rents
are
income taxable under FSM Income Tax Statute, and a state tax on gross
rental receipts combines to create vertical multiple taxation of a
form of
income.Truk Continental Hotel, Inc. v. Chuuk, 7 FSM R. 117 (App. 1995).

(h)proceeds
of export sales of tangible personal property produced or manufactured
in the
Federated States of Micronesia and delivered to a buyer outside the
Federated
States of Micronesia;

(i)proceeds
of sales of products of a processing facility in the Federated States
of
Micronesia which are subsequently exported from, and not used in, the
Federated
States of Micronesia;

(j)proceeds
of sales of fish by foreign or domestic fishing vessels to processing
facilities within the Federated States of Micronesia; or

(k)proceeds
of sales of bait fish to foreign or domestic fishing vessels.

(l)proceeds
from

(i)recycling
waste paper, plastic,
aluminum, tin or other scrap metal, or glass so that such materials
may be
re-used,

(ii)removing
such waste materials, motor
vehicles, appliances, batteries, paint or toxic chemicals from the
Federated
States of Micronesia for disposal or recycling; or

(iii)collecting
such waste materials, motor
vehicles, appliances, batteries, paint or toxic chemicals for the
purposes of
removal from the Federated States of Micronesia for recycling or
disposal.

(6)“Military
or Naval Forces of the United States” and “Armed Forces of the United
States”
means all regular and reserve components of the uniformed services
which are
subject to the jurisdiction of the Secretary of the Army, Navy, or Air
Force,
and also includes the Coast Guard.

(7)“Month”
means calendar month.

(8)“Taxable
gross revenue” shall mean, for any tax period, the figure calculated
by
deducting from the Gross Revenues for the period, the following
expenses of the
business for that period:

(a)wages,
salaries and benefits reasonably paid by the taxpayer to or on behalf
of
employees of the business for personal services relating to producing
the Gross
Revenues, as such wages and salaries are reported pursuant to
subchapter III of
chapter 1 of title 54 of this code; and

(b)Social
Security contributions by the business in respect of its employees
pursuant to
section 902 of title 53 of this code.

Cross-reference:Title 53 of this code is on
Social Security.

(9)“Processing
facility” means a business that prepares, alters, and/or packages raw
materials
into a finished product for resale.

(10)“Purchase
payments”
means payments on the actual selling price, including any interest,
carrying charges, or other charges associated with a sale. As
used herein, the word “sale” implies a
transfer of ownership of that which is sold, in exchange for the
purchase
payments or promise thereof.

(11)“Rental
payments”
means any payments made in exchange for use or rental, and includes
interest, carrying charges, or other charges associated with use or
rental.

(12)“Secretary”
means
the Secretary of the Department of Finance and Administration.

(13)“Wages”
or
“Salaries” means and includes commissions, fees, compensation,
emoluments,
bonuses, and every and all other kinds of compensation paid for, or
credited or
attributable to, personal services performed by an individual, which
services
have been performed by such person as an employee. Wages
and salaries shall not include the
following:

(a)any
payment received from the United States by members of the Military or
Naval
Forces of the United States or the Armed Forces of the United States;

(b)reasonable
per diem and travel allowances to the extent that they do not exceed
any
comparable Federated States of Micronesia Government rates;

(c)rental
value of a home furnished to any employee or a reasonable rental
allowance paid
to any employee (to the extent such allowance is used by the employee
to rent
or provide a home);

(d)any
payment on account of sickness or accident disability, or any payment
of
medical or hospitalization expenses, made by an employer to or on
behalf of an
employee; provided, however, that normal wages or salaries paid to an
employee for
a period of time during which he is excused from work because of
sickness shall
not be excluded from wages and salaries under this subsection;

(e)any
payment made to or on behalf of an employee or to his beneficiary from
a trust
or annuity;

(f)remuneration
paid in any medium other than cash to an employee for service not in
the ordinary
course of the employer’s trade or business;

(g)remuneration
paid for casual or intermittent labor not performed in the ordinary
course of
the employer’s trade or business and for not more than one week in
each
calendar month;

(h)any
payment in the form of a scholarship, fellowship, or stipend made to
any
employee while he is a full-time, bona
fide student at an educational institution;

(i)any
payment received by a minister of the gospel or clergyman from a
religious
group or organization;

(j)any
payment received by an employee for services performed as a domestic
or
household employee for a private individual or family;

(k)any
payment received by an employee, who is not a citizen of the Federated
States
of Micronesia, while employed by an international organization,
foreign
contractor, or other foreign entity performing services or otherwise
conducting
business in furtherance of a foreign aid agreement entered into by the
Federated States of Micronesia, the terms of which require that such
wages and
salaries shall not be subject to taxation by the Government of the
Federated
States of Micronesia; or

(l)the
foreign service premium authorized by section 163 of title 52 of this
code.

Editor’s
note:Definition of “Director” has
been editorially
replaced with definition of “Secretary,” in accordance with title 2
(Executive), § 203, of this code.References to “Director” throughout this chapter have been
changed to
“Secretary.”Subsections
have been
rearranged in alphabetical order.

Cross-reference:Chapter 2 of title 10
(Foreign Relations)
provides exemptions from taxation for certain designated international
organizations.

Case
annotations:The common law for the FSM
referred to at 54 F.S.M.C.
112(3) is not based upon the law of England at the time of the
American
Revolution but upon the law of the United States, the Trust Territory
and other
nations in the common law tradition up to the initiation of
constitutional
government in 1979.Rauzi v. FSM, 2 FSM R. 8, 17 (Pon. 1985).

FSM
Income
Tax Law’s distinction between employees and businesses obviously
reflects congressional expectation that businesses and employers are
generally
distinguishable on the basis of whether generation of their income
would
require substantial expenditures by them.Rauzi v. FSM, 2 FSM
R. 8,
(Pon. 1985).

In
the Federated
States of Micronesia Income Tax Law, 54 F.S.M.C. 111 et seq.,
cooperatives are not singled out in any way within the definition of
business
and there is no indication in the tax law that cooperatives are to be
treated
differently than corporations or any other forms of businesses.KCCA v.
Tuuth, 5 FSM R. 68, 70 (Pon. 1991).

§
113.Taxes collected
declared
realization of the FSM.

The taxes levied, assessed, and
collected under and pursuant to this chapter shall be paid to the
treasurer of
the Federated States of Micronesia and become part of the General Fund
of the
Federated States of Micronesia as local revenue realization available
for
appropriation by the Congress of the Federated States of Micronesia.

3.COM PL 4C-2 § 20 was the law
prior to its
amendment by PL 7-41 § 2.Its
modification
by Secretarial Order No. 3027 § 7 is noted by the cross-reference.

Cross-reference:See also Secretarial Order
No. 3027, § 7.

The
statutory
provisions on the President and Executive are found in title 2 of this
code.The statutory
provisions on the
FSM Congress are found in title 3 of this code.

The website of the FSM National Government contains
announcements, press releases, news, forms, and other information on
the
National Government at http://fsmgov.org.

The official website of the Congress of the
Federated States
of Micronesia contains the public laws enacted by the Congress,
sessions,
committee hearings, rules, and other Congressional information at http://www.fsmcongress.fm/.

§
114.Regulations.

(1)The
Secretary shall, subject to approval of the President of the Federated
States
of Micronesia, prescribe and have printed reasonable regulations for
the
enforcement of this chapter and such regulations shall have the force
and
effect of law if they are not in conflict with the express provisions
of this
chapter or other laws of the Federated States of Micronesia.

(2)Such
regulations shall also provide for the making of returns concerning
any taxes
imposed by this chapter, and the payment thereof, in any situations
not
specifically covered by this chapter.

Cross-reference:The statutory provisions on the
President
and Executive are found in title 2 of this code.

The
statutory
provisions on Administrative Procedure are found in title 17 of this
code.

§
115.Tax
returns—Information required.

(1)The
Secretary shall prescribe the forms of all returns required to be
furnished
under the provisions of this chapter or provide for other methods of
filing
returns and may provide in such forms for the giving of such
information as he
may deem necessary or advisable.

(2)All
information required by the form of any return must be included in the
return
by the person, employer, company, or business responsible for making
the
return.

(3)No
return shall be complete unless and until it is signed by or for the
employer,
business or other person liable to make the return, or by someone
authorized to
do so in behalf of such employer, business, or other person.Every return shall be signed by a natural
person.

(4)The
Secretary may require that, if any person or persons actually prepare
or sign a
return for another employer, business, or other person, a form stating
such
facts and authorizing such person to sign such return be signed by the
person
so preparing or signing the return, and the employer, business, or
other person
in whose name the return is filed.

(5)The
Secretary may by regulations define the classes of persons to whom
this
provision shall apply.

(6)Any
other provision of law to the contrary notwithstanding, no oath shall
be
required upon any tax return.

(7)Revenue
shall be identified by the State or States in which it is earned.

(1)All
reports and returns required by this chapter shall be preserved for
three years
and thereafter until the Secretary orders them to be destroyed.

(2)The
Secretary and every employee of the Department of Finance shall
maintain the
secrecy of all matters relating to this chapter which come to their
knowledge
and shall not communicate such matters to any person except for the
purpose of
carrying into effect this chapter or any other enactment imposing
taxes or
duties payable to the Government of the Federated States of
Micronesia.

(3)No
employee of the Department of Finance shall be required to produce in
any court
any matter or thing relating to the taxes imposed by this chapter
coming under
his notice in the performance of his duties as an employee of the
Revenue
Division except when it is necessary to do so for the purpose of
carrying into
effect any provision of this chapter or any other enactment imposing
duties or
taxes payable to the Government of the Federated States of Micronesia.

(4)Information
as to the amount of income or any particular set forth or disclosed in
any
report or return required under this chapter may, upon request of a
committee
appointed by the Congress of the Federated States of Micronesia, be
furnished
to the committee, but the committee or any member, clerk, or other
officer or
employee thereof shall not disclose any particulars of the information
so
furnished except to law enforcement officers for the purpose of aiding
the
detection or prosecution of crimes committed in violation of this
chapter.

(5)The
Governor of each State may appoint one representative of his
administration who
shall have access to all returns, reports, or other information on
file with
the Department of Finance as may be necessary to show that the
required
distribution of revenues to his State has been made. Each Governor
shall make
the appointment of his representative known to the Secretary of
Finance.The appointee
may share information acquired
hereunder with the Governor of his State.The Governor and his appointee may not disclose the information
to any
other person except for the specific purpose of ensuring that the
required
distribution of revenues to their State has been made, or except as
otherwise
provided for by law.

(6)The
Attorney General or other legal representatives of the Government of
the
Federated States of Micronesia may inspect the report of return of any
taxpayer
who brings an action to set aside or review the tax based thereon, or
against
whom an action or proceeding has been instituted to recover any tax or
any
penalty imposed by this chapter.

(7)Nothing
herein shall prohibit the Secretary or his delegate from compiling and
publishing statistics or information generally on the returns filed so
long as
there is no reference to a particular return and the statistics and
the
information do not in effect divulge the contents of any one return.

Cross-reference:The statutory provisions on the
President
and Executive are found in title 2 of this code.

§
117.Restrictions on
outside employment.

(1)The
Secretary and every employee of the Department of Finance while in
such
employment shall not engage in the business or profession of tax
accounting or
accept employment with compensation from any person, firm, or
corporation for
the purpose, directly or indirectly, of preparing the tax returns
required by
the Government of the Federated States of Micronesia.

(2)Nor
shall any person accept any employment for the purpose of advising or
preparing
materials or data, or the auditing of books or records to be used in
an effort
to defeat or cancel any tax or part thereof that has been assessed by
the
Government of the Federated States of Micronesia.

Any violation of subsections (2),
(3), (4), or (5) of section 116 or violation of section 117 of this
chapter
shall be a misdemeanor and shall be punishable by a fine of not more
than $500,
or imprisonment for not more than six months, or both.

There shall be assessed, levied,
collected, and paid a tax of six percent upon the first $11,000 and
ten percent
upon the amount over the first $11,000 of all wages and salaries
received by
every employee, as defined, except as provided in section 122 of this
chapter.

Case
annotations:In the FSM Income Tax Law,
54 F.S.M.C. 111 et
seq., cooperatives are not singled out in any way within the
definition of
business and there is no indication in the tax law that cooperatives
are to be
treated differently than corporations or any other forms of
businesses.Kolonia
Consumers
Coop. Ass’n v. Tuuth, 5 FSM R. 68, 70 (Pon. 1991).

An
income
tax typically applies to practically all income, with rates payable
based on the total income of the taxpayer, after giving allowance to
certain
exemptions, and normally extends to all forms of income, including
wages and
salaries, interest, royalties, fees and returns on capital, as well as
income
realized through the sale of goods. Youngstrom v. Kosrae, 5 FSM
R. 73, 76
(Kos. 1991).

The
FSM
Income Tax Law confirms that it is the nature of the services
performed and
the person performing the services, rather than the stated identity of
the
contracting party, which determines the tax treatment for the
compensation
under the contract.It is
of no import
that the “contractor” was identified as a corporation rather than as
an
individual when the contract makes clear that the primary services to
be
rendered were those of an individual and the corporation was merely a
name
under which the individual conducted business.Heston v. FSM, 2 FSM
R. 61, 64
(Pon, 1985).

All
Government
officials are employees of the Government within the meaning of the
FSM Income Tax Law.Heston v. FSM, 2 FSM R. 61, 65 (Pon. 1985).

Although
plaintiff
incurred expense in carrying out his obligations under contract, they
were well below ten percent of the amount he received under the
contract.Such
expenditures are insufficient to alter
plaintiff’s status from an “employee” to a “business” under the FSM
Income Tax
Law.Heston
v.
FSM, 2 FSM R. 61, 66 (Pon. 1985).

A
taxpayer who held the high public office of Chief of Finance, whose
contract
gave him a wide degree of discretion in carrying out governmental
powers, and
who was not an outside consultant who could merely suggest or advise
but was an
integral part of the governmental operation is a governmental
official,
therefore an employee for purposes of the FSM Income Tax Law.Heston
v. FSM, 2 FSM R. 61, 65 (Pon. 1985).

The
FSM
Income Tax Law’s distinction between employees and businesses
obviously
reflects congressional expectation that businesses and employees are
generally
distinguishable on the basis of whether generation of their income
would
require substantial expenditures by them. Rauzi v.
FSM, 2 FSM R. 8, 19 (Pon. 1985).

There
is
a common law of taxation which addresses the status of public
officials as
employees. Rauzi v. FSM, 2 FSM R. 8, 17 (Pon. 1985).

A
Pohnpei State Government official is an employee for purposes of the
FSM Income
Tax Law. Rauzi v. FSM, 2 FSM R. 8, 12 (Pon. 1985).

There
appears
to be uniform acceptance by common law jurisdictions of the principle
that government officials are considered employees for income tax
purposes.This amounts to
common law
rule of taxation and yields a result in harmony with the underlying
principles
of the taxation system established by the FSM Income Tax Law.Rauzi
v. FSM, 2 FSM R. 8, 12 (Pon. 1985).

§
122.Deduction from
tax; Claim for
refund.

(1)Every
employee, as defined, except those whose gross annual wages and
salaries are
$5,000 or more, shall be allowed a deduction of $1,000 per year from
all wages
and salaries subject to tax levied by section 121 of this chapter and
received
by the employee in the year in which the deduction is claimed.

(2)The
deduction shall be claimed by the employee filing for a refund under
the
provisions of section 123 of this chapter.

(1)If
it shall be shown, upon application of an employee, that there has
been
withheld from his wages or salaries any tax not due thereon, or more
than the
amount of tax due thereon, or that he has paid from his wages and
salaries any
tax not due thereon or more than the amount of tax thereon, or if it
is shown
upon application of the business that it has paid an amount not due as
tax
under this chapter or greater than the tax levied under this chapter,
then the
Secretary shall refund the amount found to have been overpaid or
otherwise not
due and shall pay such refund out of current collections of the tax;
provided,
the Secretary shall be satisfied that:

(a)the
amount so overpaid or otherwise not due has been paid to the
Government;

(b)the
amount of refund claimed has not been used as a credit against any tax
or taxes
due and payable to the Government from such employee; and

(c)application
for such refund was filed within one year after the end of the
calendar year in
which the amount to be refunded was withheld or paid.

(2)The
Secretary shall make a decision on the application for refund within
90 days
after it is submitted.

Source:COM PL 4C-2 § 17; TT Code
1980, 77 TTC 267.

Cross-reference:The statutory provisions on the
President
and Executive are found in title 2 of this code.

§
124.Source of wages.

If an employee is credited or paid
salaries or wages derived from, or attributable to, personal services
performed
or rendered both within and without the Federated States of
Micronesia, then
the whole of the salaries or wages shall be presumed to have been
earned within
the Federated States of Micronesia.

(1)The
tax imposed by section 121 of this chapter shall be collected by the
employer
by deducting and withholding the tax imposed on any wages and salaries
as and
when paid or credited to the employee.

(2)Every
employer required to deduct and withhold the tax imposed shall be
liable for
the payment and shall pay such tax to the National revenue officer of
the State
in which the employer has his principal place of business, or to the
Secretary,
if the employer has no place of business in the Federated States of
Micronesia.

(3)Any
employer who violates any of the provisions of this section shall be
subject to
the penalties prescribed in this chapter.

Cross-reference:The statutory provisions on
Business
Regulation are found in title 32 of this code.The statutory provisions on Corporations and Business
Associations are
found in title 36 of this code.

(1)The
employer shall, on or before the last day of the month following the
close of
each quarter, to wit, on or before April 30, July 31, October 31, and
January
31, pay the tax withheld, and make a full, true, and correct return
showing all
wages and salaries covered by section 131 of this chapter paid by him
during
the preceding quarter, and showing the tax due and withheld thereon,
which
return shall be filed at the place prescribed in section 131 of this
chapter
for payment of the tax and shall include such other information as
shall be
required or prescribed by the Secretary.

(2)With
respect to salaries and wages paid out of public moneys, the Secretary
at his
discretion may prescribe special forms for, and different procedures
and times
for, the filing of such returns by employers paying such compensation,
or may,
upon such conditions and subject to such rules as he may prescribe
from time to
time, waive the filing of any such returns.

(3)The
Secretary may require more frequent returns and payments as he in his
discretion feels are advisable, but in no case shall an employer be
required to
make returns and payments more frequently than monthly.The Secretary, for good cause, may extend the
time for making returns and payments but not beyond the last day of
the first
month next succeeding the regular due date thereof.

Cross-reference:The statutory provisions on
Business
Regulation are found in title 32 of this code.The statutory provisions on Corporations and Business
Associations are
found in title 36 of this code.

§
133.Resident
employers—Withholding statements
to employees.

(1)Every
employer required to deduct and withhold any tax on the salaries and
wages of
any employee shall furnish to each such employee on or before January
31 of the
succeeding year (or, if his employment is terminated before the close
of such
calendar year, on the day on which the last payment of compensation is
made) a
written statement showing the wages or salaries paid by the employer
to such
employee during the year and the amount of the tax deducted and
withheld or
paid with respect to such compensation.

(2)Such
employer shall include with his final return for the calendar year, or
shall
file on or before January 31, a duplicate copy of each such statement,
at the
place prescribed in section 131 of this chapter for the payment of the
tax.

(3)The
Secretary may grant to any employer a reasonable extension of time,
not in
excess of 60 days, with respect to any statement required by this
section to be
furnished to any employee or to be filed, and may by regulation
provide for the
furnishing or filing of statements at such other times and containing
such
other information as may be required for the administration of this
chapter.

(4)The
Secretary shall prescribe the form of statement required by this
section and
may adopt any United States Federal income tax form appropriate for
the
purpose.

Source:COM PL 4C-2 § 4(b); TT Code
1980, 77 TTC
254(2).

§
134.Resident
employers—Liability to
penalties.

Any employer who violates any of the
provisions of sections 132 and 133 of this chapter shall be subject to
penalties prescribed in this title.

Source:COM PL 4C-2 § 4(c); TT Code
1980, 77 TTC
254(3); PL 13-61 § 1.

§
135.Employer’s
responsibility for
withheld taxes.

(1)All
taxes withheld by any employer under section 131 of this chapter shall
be held
in trust by such employer for the Government and for payment to the
Secretary
in the manner and at the time required by this chapter.

(2)If
any employer shall fail, neglect, or refuse to deduct and withhold
from the
compensation paid to an employee, or to pay over, the amount of the
tax imposed
by this chapter, such employer shall, moreover, be liable to pay to
the
Government the amount of the tax, which amount shall (whether or not
tax
withholdings constituting trust funds have been commingled with said
employer’s
assets) form a lien on the employer’s entire assets, having priority
over all
other claims and liens, except as provided by the Secured Transactions
Act.

(3)Any
employer may recover from an employee any amount which he should have
withheld
but did not withhold from such employee’s wages and salaries, if he
has been
required to pay and has paid the amount to the Government out of his
own funds
pursuant to this section.

Any
lien
rights of the government under § 135(2) supersede even preexisting
lien
rights of any other party.Bank of Guam v. Island Hardware,
Inc. (II),
3 FSM R. 105, 110 (Pon. 1987).

Attachment
and
seizure create statutory and possessory lien rights which will be
unaffected by subsequent writs of execution, but will be subject to
national
government’s wage and salary tax lien claims under 54 F.S.M.C. 135(2),
to wage
claims of low level employees and laborers, and to pre-existing
national
government lien rights under 54 F.S.M.C. 153.In re Mid-Pacific Constr.
Co.,
3 FSM R. 292, 303 (Pon. 1988).

The
priority
lien rights provided for the government in section 135(2) relate only
to wage and salary tax claims and not to gross revenue taxes or other
taxes. Bank
of
Guam v. Island Hardware, Inc. (II), 3 FSM R. 105, 111 (Pon.
1987).

Under
54
F.S.M.C. 135(2), no other payment to creditors may be made from
execution
sale proceeds until all amounts owing for wage and salary taxes are
paid in
full to the government.In re Mid-Pacific Constr. Co.,
3 FSM R.
292, 297 (Pon. 1988).

No employee shall have any right of
action against his employer with respect to any moneys deducted from
such
employee’s salaries and wages in compliance or intended compliance
with this
chapter, and paid to the person designated in section 131 of this
chapter.

Source:COM PL 4C-2 § 6; TT Code
1980, 77 TTC 256.

§
137.Nonresident
employers—Employees to
file returns.

(1)Any
individual who is paid or credited wages or salaries from an employer
who does
not have a place of business in the Federated States of Micronesia and
does not
have an agent within the Federated States of Micronesia responsible
for making
the returns, withholdings, and payments of taxes on compensation
required by
this chapter, shall file a return with and pay the tax due under this
chapter
to the National revenue officer of the State in which he resides or in
which he
is present at the time for payment as may be required by the rules of
the
Secretary, or, if he is not at the time within the Federated States of
Micronesia, then with and to the Secretary.

(2)Any
individual who is paid or credited wages from the United States or an
instrumentality thereof shall be under the same duty as an individual
who is
paid or credited wages or salaries from an employer who does not have
a place
of business in the Federated States of Micronesia, unless the tax has
been
withheld from such salaries and wages as provided by section 131 of
this
chapter.

(1)All
such returns shall be filed, and the payments thereon shall be made,
at the
times and in the manner prescribed in sections 131 and 132 of this
chapter, and

(2)Each
return shall state the name of the individual filing the same, the
name,
residence, and address of his employer, the total of all compensation
received
for the preceding three months, and the tax due thereon, and shall
include such
other information and be upon such form as the Secretary shall require
or
prescribe.

(1)The
Secretary, upon request of a taxpayer required by section 137 of this
chapter
to make returns, may permit semiannual returns and payments of tax
with respect
to salaries and wages, and in granting such permission shall fix the
date or
dates for such filing of returns and payment of taxes.

(2)The
Secretary, for good cause, may extend the time for making returns and
payments,
but not beyond the twentieth day of the second month succeeding the
regular due
date thereof.

(3)Failure
to comply with the provisions of sections 137, 138, and 139 of this
chapter
shall be punishable under the penalties prescribed in this title.

Cross-reference:The statutory provisions on the
President
and Executive are found in title 2 of this code.

Subchapter
IV

Taxation of Gross Revenues

§
141.Tax on gross
revenues; Exemption.

(1)There
shall be assessed, levied, collected, and paid a tax of $80 per year
upon that
portion of the amount of taxable gross revenues earned by every
business
subject to the provisions of this chapter which does not exceed
$10,000 per
year.

(2)There
shall be assessed, levied, collected, and paid a tax of three percent
per year
upon that portion of the amount of taxable gross revenues earned by
every
business subject to the provisions of this chapter which is in excess
of
$10,000 per year.

(3)Businesses
which earn gross revenues of not more than $2,000 per year are exempt
from
taxation under this section.The
deduction
shall be claimed by the business by filing for a refund under the
provisions of sections 122 and 123 of this chapter.

(4)For
the purpose of section 805 of this title, every business that operates
in more
than one State of the Federated States of Micronesia shall file a
separate tax
return for revenue collected in each State.

Cross-reference:The statutory provisions on
Business
Regulation are found in title 32 of this code.The statutory provisions on Corporations and Business
Associations are
found in title 36 of this code.

The
gross
revenue tax as enacted by the Congress of Micronesia continued in
effect
in the FSM by virtue of the transition article of the FSM Constitution
but,
because it was subsequently amended by the FSM Congress and was
included in the
codification of FSM Statutes, may now be considered a law enacted by
Congress. Afituk
v.
FSM, 2 FSM R. 260, 264 (Truk 1986).

Taxation
of
gross revenue of business at different amounts and rates, depending
upon the
amount of each business’s annual gross revenue is rationally related
to the
legitimate legislative purposes of requiring businesses who receive
less to pay
lower tax and of administrative simplicity, and therefore does not
violate the
due process or equal protection provisions of the FSM Constitution.Afituk
v.
FSM, 2 FSM R. 260, 264 (Truk 1986).

There
appears
to be uniform acceptance by common law jurisdictions of the principle
that government officials are considered employees for income tax
purposes.This amounts to
common law
rule of taxation and yields a result in harmony with the underlying
principles
of the taxation system established by the FSM Income Tax Law. Rauzi v.
FSM, 2 FSM R. 8, 12 (Pon. 1985).

In
the
FSM Income Tax Law, 54 F.S.M.C. 111 et seq., cooperatives are not
singled
out in any way within the definition of business and there is no
indication in
the tax law that cooperatives are to be treated differently than
corporations
or any other forms of businesses.Kolonia Consumers Coop.
Ass’n v. Tuuth,
5 FSM R. 68, 70 (Pon. 1991).

§
142.Source of gross
revenue;
Apportionment.

(1)If
any business earns or derives its gross revenue from business
activities or
undertakings both within and without the Federated States of
Micronesia during
the taxable year, then the whole of its gross revenue shall be
presumed to have
been derived from sources within the Federated States of Micronesia.

(2)The
business may file for an apportionment of the tax on a form prescribed
by the
Secretary and the tax shall be levied only on that portion which is
earned in
or derived from sources or transactions or parts of transactions
within the
Federated States of Micronesia.

Cross-reference:The statutory provisions on
Business
Regulation are found in title 32 of this code.The statutory provisions on Corporations and Business
Associations are
found in title 36 of this code.

While
there
is a presumption that all revenue of a business is derived from
sources
within the FSM, the presumption may be rebutted and the tax “levied
only on
that portion which is earned or derived from sources or transactions
within the
Federated States of Micronesia.”54 F.S.M.C.
142.Bank
of
the FSM v. FSM, 5 FSM R. 346, 349 (Pon. 1992).

The
statutory
scheme emphasizes the location of the business activity which
generates the revenue in question.Therefore revenue derived from banking investment transactions
in
Honolulu and Chicago are not taxable since they are not derived from
sources or
transactions within the FSM.Bank of the FSM v. FSM, 5 FSM
R. 346,
349 (Pon. 1992).

§
143.Returns and
payment of tax on taxable
gross revenue.

(1)Every
business, on or before the last day of the month following the close
of each
quarter, to wit: on or
before April 30,
July 31, October 31, January 31, shall pay, based on its taxable gross
revenue
of the preceding quarter, the amount of tax imposed by this chapter to
the
National revenue officer in the State in which the business has its
principal
place of business in the Federated States of Micronesia, or to the
Secretary.

(2)Each
business shall, on or before the date provided for payment of tax
under this
section, make a full, true, and correct return showing all gross
revenue
received, accrued, or earned by the business, the taxable gross
revenues of the
business, the expenses for wages and salaries and social security
contributions
claimed by the business in calculating its taxable gross revenue and
the
amounts deducted and set aside on account of the taxable gross
revenues during
the preceding quarter.

(3)The
return shall be filed at the place in this section prescribed for
payment of
the tax and shall include such other information as shall be required
or
prescribed by the Secretary. The
Secretary,
for good cause, may extend the time for making payments and returns,
but not beyond the last day of the first month succeeding the regular
due date
thereof.

Cross-reference:The statutory provisions on
Business
Regulation are found in title 32 of this code.The statutory provisions on Corporations and Business
Associations are
found in title 36 of this code.

Where
the
government’s prior audit methods had the effect of permitting gross
revenue
tax computation on the cash basis and where the government’s attempts
to advise
businesses that they are required to use the accrual method have for
many years
been woefully inadequate, the government will be barred by equitable
estoppel
from assessing penalties and interest on any underpayment of taxes
that was the
result of being led to believe that the cash basis was an acceptable
method of
tax computation.NIH Corp. v. FSM, 5 FSM R. 411, 415 (Pon. 1992).

§
144.Liability for
payment of tax;
Penalties.

(1)Every
business shall be liable for the payment of the tax required to be
deducted and
paid by it to the Government.

(2)Failure
to comply with the provisions of this section shall be punishable
under the
penalties prescribed by this title.

Cross-reference:The statutory provisions on
Business
Regulation are found in title 32 of this code.The statutory provisions on Corporations and Business
Associations are
found in title 36 of this code.

All persons, employees, and
businesses required to make and file returns under this chapter shall
keep and
maintain accurate records, and the records may be inspected and
audited at any
reasonable time by the Secretary for the purpose of administering the
provisions
of this chapter.

Source:COM PL 4C-2 § 13(b); TT Code
1980, 77 TTC
263(2).

Cross-reference:The statutory provisions
on Business
Regulation are found in title 32 of this code.The statutory provisions on Corporations and Business
Associations are
found in title 36 of this code.

§
152.Tax assessment
on failure to file
or pay.

(1)Upon
the failure of any person, business, or employer to make and file a
return
required by this chapter within the time and in the manner and form
prescribed,
or upon failure to pay any amount due, the Secretary may notify such
person,
business, or employer of such failure and demand that a return be made
and
filed and the tax paid as required by this chapter.

(2)If
such person, business, or employer upon notice and demand by the
Secretary
fails or refuses within 30 days after receipt of said notice and
demand to make
and file a return and pay the tax required by this chapter, the
Secretary may
make a return for such person, business, or employer from any
information and records
obtainable, may file a notice of lien pursuant to the Secured
Transactions Act,
and may levy and assess the appropriate amount of tax.

(3)Such
assessment shall be presumed to be correct unless and until it is
proved
incorrect by the person, business, or employer disputing the amount of
the
assessment.

Cross-reference:The statutory provisions on the
President
and Executive are found in title 2 of this code.

Case
annotations:By statute, a taxpayer is
liable for
penalties and interest on any underpayment of his gross revenue tax
liability
regardless of the reason for underpayment, unless some other principle
of law
applies to afford the taxpayer relief. NIH Corp. v. FSM, 5 FSM R.
411, 413-14
(Pon. 1992).

Pursuant
to 54
F.S.M.C. 152(3), the Secretary’s gross revenue tax assessment is be
presumed to
be correct unless and until it is proved incorrect by the person,
business, or
employer disputing the amount of the assessment.Ting Hong Oceanic Enterprises v. Ehsa, 10 FSM R. 24, 31 (Pon. 2001).

When
the taxpayer
has failed to meet its the burden of showing that the Secretary’s
assessment
was incorrect and has failed to put forth competent evidence in
opposition to
the Secretary’s summary judgment motion and its lengthy opposition
contained
only legal argument, the taxpayer has failed to submit evidence
establishing
that the Secretary’s assessment was incorrect and summary judgment in
the
Secretary’s favor is appropriate.Ting Hong Oceanic
Enterprises v. Ehsa,
10 FSM R. 24, 31 (Pon. 2001).

§
153.Lien on
property.

All taxes imposed or authorized
under this chapter shall be a lien upon any property of the person or
business
obligated to pay said taxes and may be collected by levy upon such
property in
the same manner as the levy of an execution.

Source:COM PL 4C-2 § 16; TT Code
1980, 77 TTC 266.

Cross-reference:The statutory provisions on
Business
Regulation are found in title 32 of this code.The statutory provisions on Corporations and Business
Associations are
found in title 36 of this code.The
statutory
provision on tax liens is found in § 801 of this title.

Case
annotations:

Taxation—Tax Liens

The
statute
54 F.S.M.C. 153 does not require the government to give notice of its
lien claims to any other creditors or even to the taxpayer.This statute, then, authorizes a lien which
may be kept secret from interested parties.The effect of such a lien would be determined against the
background of
the strong general policy against secret liens. Bank of Guam v. Island Hardware, Inc. (II), 3 FSM R. 105, 108 (Pon.
1987).

A
section 153 lien should be treated as an equitable lien, its effect to
be
determined on a case-by-case basis with a view toward equitable
considerations,
especially when the government has taken reasonable and timely action
to notify
such other parties to the government’s claims based upon tax
delinquency.Bank
of
Guam v. Island Hardware, Inc. (II), 3 FSM R. 105, 108 (Pon.
1987).

Priority
of
national government’s lien for unpaid business gross revenue taxes
under 54 F.S.M.C.
153 is subject to requirement that government take reasonable and
timely action
to notify other parties of the government’s claim, but filing of
litigation is
sufficient notification to all parties under 54 F.S.M.C. 153.In re
Mid-Pacific Constr. Co., 3 FSM R. 292, 297 (Pon. 1988).

In
order
for government’s judgment for gross revenue taxes to have a highest
priority lien, notice that the tax payments are overdue, not just that
tax
liability has accrued must be given.In re Island Hardware,
3 FSM R. 332, 338
(Pon. 1988).

Where
the
government is entitled to a lien on the debtor’s assets as of the date
it
gave notice of its claim for those taxes the lien also becomes
effective as of
that date. In re Pacific
Islands
Distributing Co., 3 FSM R. 575, 585 (Pon. 1988).

An
intervenor
must make a three part showing to qualify for intervention as a
matter of right: an interest, impairment of that interest, and
inadequacy of
representation by existing parties.A
tax lien holder and a judgment creditor with an unsatisfied writ of
execution
may intervene as a matter of right where an assignee is compromising a
debtor’s
accounts receivable.California
Pac. Assocs. v. Alexander, 7
FSM R. 198, 200 (Pon. 1995).

§
154.Criminal
penalties.

Any person or business convicted
under the provisions of this chapter shall be fined not more than
$1,000, or,
if a natural person, imprisoned not more than one year, or both.

Source:COM PL 4C-2 § 14; TT Code
1980, 77 TTC 264.

Case
annotations:Statutory provisions
designed to enhance the
capacity of the government to enforce penalties for failure to pay
taxes are
penal, not remedial, and should be strictly construed.In re
Island Hardware, Inc., 3 FSM R. 428, 432 (Pon. 1988).

§
155.Civil penalties.

The criminal penalties imposed by
section 154 of this chapter for violation of provisions of this
chapter shall
be separate from, and in addition to, all other penalties or interest
provided
for in this section.The
following civil
penalties are hereby levied and shall be assessed and collected by
this
Secretary:

(1)Failure to file return
on time.Except as
may be permitted by the Secretary
pursuant to sections 139 and 143 of this chapter, if any taxpayer
fails to make
and file a return required under this chapter on or before the date
set, unless
prior to that date such taxpayer applied for and received an extension
for
reasonable cause, one percent of the tax shall be added for each 30
days or
fraction thereof elapsing between the due date of the return and the
date on
which it is actually filed; provided, however, that the minimum
penalty under
this subsection shall be five dollarsand the
maximum
penalty under this section shall be 25 percent of the tax due.

(2)Failure by employer to
file statement.Any
employer required to furnish a written
statement prescribed in section 133 of this chapter who willfully
failed to
file such statements on the date prescribed thereof, except with
regard to any
extension of time for filing, shall be subject to a five dollar
penalty for
each such statement not so filed.

(3)Failure to file after
demand.Where
taxpayer fails to file return and pay
tax after demand in any case where the Secretary makes a return and
assesses a
tax after a taxpayer’s failure or refusal to make and file a return
and pay the
tax required by this chapter, ten percent of the tax assessed, in
addition to
the penalties of subsection (1) of this section, shall be added
thereto.

(4)False and fraudulent
returns.If any
part of any deficiency is due to fraud
with intent to evade the tax, or any portion thereof, 50 percent of
the total
amount of such deficiency, in addition to the penalties provided in
subsections
(1), (2), and (3) of this section, shall be assessed and added to the
deficiency assessment.

(5)Interest.If any tax or penalty imposed by this chapter
is not paid on or before the date prescribed for such payment, there
shall be
collected, in addition to such tax and any penalties assessed,
interest on the
unpaid balance of the tax principal at the rate of six percent per
annum from
its due date until the date it is paid.

Cross-reference:The statutory provisions on the
President
and Executive are found in title 2 of this code.

Case
annotations:Under 54 F.S.M.C. 135(2), no
other payment to
creditors may be made from execution sale proceeds until all amounts
owing for
wage and salary taxes are paid in full to the government.In re
Mid-Pacific Constr. Co., 3 FSM R. 292, 297 (Pon. 1988).

In
order
for government’s judgment for gross revenue taxes to have a highest
priority lien, notice that the tax payments are overdue, not just that
tax
liability has accrued must be given.In re Island Hardware,
3 FSM R. 332, 338
(Pon. 1988).

Statutory
provisions
designed to enhance the capacity of the government to enforce
penalties for failure to pay taxes are penal, not remedial, and should
be
strictly construed.In re Island Hardware, Inc., 3 FSM R. 428, 432 (Pon. 1988).

By
statute,
a taxpayer is liable for penalties and interest on any underpayment of
his gross revenue tax liability regardless of the reason for
underpayment,
unless some other principle of law applies to afford the taxpayer
relief.NIH
Corp.
v. FSM, 5 FSM R. 411, 413-14 (Pon. 1992).

Where
the
government’s prior audit methods had the effect of permitting gross
revenue
tax computation on the cash basis and where the government’s attempts
to advise
businesses that they are required to use the accrual method have for
many years
been woefully inadequate, the government will be barred by equitable
estoppel
from assessing penalties and interest on any underpayment of taxes
that was the
result of being led to believe that the cash basis was an acceptable
method of
tax computation. NIH Corp. v. FSM, 5 FSM R. 411, 415 (Pon. 1992).

§
156.Judicial review.

(1)If
a decision of the Secretary is adverse to the taxpayer, in whole or in
part,
the taxpayer shall have the right within one year from the date of
such
decision to institute an action for review, irrespective of the
amount, in a court
of competent jurisdiction in the Federated States of Micronesia. Such action shall be commenced
by filing a
petition setting forth assignments of all errors alleged to have been
committed
by the Secretary in his determination of the assessment, the facts
relied upon
to sustain such assignments of errors, and a prayer for appropriate
relief.The Secretary or
his successor
in office shall be the defendant in such proceedings.

(2)When
the decision of the court or an appeal therefrom becomes final, the
Secretary
shall, upon presentation of a certified copy of the decree, make such
adjustments as are necessary to correct, amend, or abate the
assessment, and to
determine whether any additional amount should be assessed.

(3)Where
the assessment is paid, in whole or in part, after the filing of the
petition,
the court shall not thereby be deprived of jurisdiction.

Source:COM PL 4C-2 § 18; TT Code
1980, 77 TTC 268;
PL 1-83 § 1(10).

Cross-reference:The statutory provisions on
the FSM Supreme
Court and Judiciary are found in title 4 of this code.The statutory provisions on Judicial
Procedures are found in title 6 of this code.

The FSM Supreme Court website contains court
decisions,
rules, calendar, and other information of the court, the Constitution,
the code
of the Federated States of Micronesia, and other legal resource
information at http://www.fsmsupremecourt.org/.

Case annotations:Because
a man
who denies the legality of a tax should have a clear and certain
remedy,
justice may require that he should be at liberty to pay promptly and
bring suit
on his side.Weno v. Stinnett, 9 FSM R. 200, 212 (App. 1999).

The
filing of a
suit to contest the legality of a tax, which the trial court found to
be the
plaintiffs’ only remedy, obviates the need for demonstrating duress
and notice
of protest, as required by the common law, for payments made after
suit is
instigated.The filing of
suit is protest
of the most emphatic sort, and allowing a claim for recovery for
payments made
thereafter without regard to duress recognizes the "implied duress"
under which contested taxes are paid.Weno v. Stinnett, 9
FSM R. 200, 212
(App. 1999).

Duress
and protest
need not be shown to state a claim for recovery of tax payments
extracted under
an unconstitutional enactment when the plaintiffs seek refund of
payments made
after instigation of suit in a court having jurisdiction over the
parties, and
when such a lawsuit is the plaintiff’s only remedy.Weno v.
Stinnett, 9 FSM R. 200, 212 (App. 1999).

The
taxing
authority, if it opts not to provide predeprivation process, must by
way of
postdeprivation process provide a clear and certain remedy for any
erroneous or
unlawful tax collection to ensure that the opportunity to contest the
tax is a
meaningful one.A clear
and certain
remedy is one designed to render the opportunity to challenge a tax
meaningful
by preventing any permanent unlawful deprivation of property.Weno v.
Stinnett, 9 FSM R. 200, 213 (App. 1999).

When
deciding the
question of retroactivity of a decision declaring a tax
unconstitutional, a
court considers three factors:1)
whether
a decision enunciates a new and unanticipated principle; 2) whether
retroactive application to this case would promote implementation of
the rule
at issue, taking into consideration the rule’s history; and 3) the
equities of
the case as they are associated with retroactive application.Weno v.
Stinnett, 9 FSM R. 200, 214 (App. 1999).

When
Continental
has alleged a sufficient stake in the action’s outcome and is
threatened not
only with substantial costs if it complies but also with civil and
criminal
penalties if it does not and these threatened injuries are all
traceable to the
Chuuk service tax and would be addressed by a favorable decision, it
may
therefore challenge the legal requirement that it collect the tax (and
remit it
to the State) even if technically, only the statutorily defined
taxpayer has
the legal ability to challenge the tax’s validity.Continental
Micronesia, Inc. v. Chuuk, 17 FSM R. 152, 159 (Chk. 2010).

§
157.Summons.

(1)For
the purposes described under sections 151 and 804 of this title, the
Secretary
shall be authorized to summon the person or persons liable for tax
under this
title to appear before the Secretary or his designee and at such
appearance to
produce such documents and to give such testimony as specified in the
summons.

(2)The
provisions of subsection (1) of this section shall also apply to any
officer or
employee or agent of such person or persons described in subsection
(1) of this
section, or any third party having possession, custody, or care of
books of
accounts relating to the business of the person or persons liable for
tax under
this title.

Source:PL 7-40 § 1.

Cross-reference:The statutory provisions on
the FSM Supreme
Court and the Judiciary are found in title 4 of this code.The statutory provisions on Judicial
Procedures are found in title 6 of this code.

Editor’s
note:PL 7-40 was signed into law
by the President
on December 23, 1991.